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Miramax bids low due to mixed-bag library?

Disparate titles, murky rights might be partially to blame

There might be a reason why bids for Miramax are coming in under what Disney would have liked, and it's not just recession-weary cost-consciousness at play.

Rather, the library is a maze of disparate titles and murky rights. Yes, there are 14 prestige titles that competed for best picture Oscars, three of which nabbed the statuette, but there also is a lot of straight-to-video fare, quirky art pics with little remake potential and other films whose ownership is unclear or hopelessly split.

Even the size of the library has been misstated over and over again. Various reports have placed it at 700 movies, but there are actually only 611 (plus 220 hours of TV episodes) and only slightly more than half of those movies got a domestic theatrical release and can be considered salable quality movies that have potential to keep generating significant revenue.

There also are five unreleased movies in the mix: Julie Taymor's adaptation of Shakespeare's "The Tempest"; the Jennifer Aniston romantic comedy "The Switch" (formerly "The Baster"); the horror thriller "Don't Be Afraid of the Dark"; the thriller "The Debt"; and the romantic comedy "Last Night," starring "Avatar" leading man Sam Worthington.

In its history, Miramax released 359 movies in the domestic theatrical market, and among those only 10 grosses of more than $100 million in North America. The biggest success was "Chicago," released in 2002, which grossed $170 million. Many of the other releases are less desirable, such as "Drag Strip Girl" and "The Deep End." There are also Asian kung fu movies and direct-to-DVD titles.

Miramax's handful of top pics did earn about 220 Academy Awards nominations and won a total of 53 Oscars.

The three bidders for the Disney niche label have different approaches.

Miramax founders Bob and Harvey Weinstein are the management component of a group bidding $600 million, with the equity coming from the Yucaipa Cos., run by Ron Burkle, who is joined by Fortress Investment Group and Colbeck Capital Management.

Out of that bid, about $50 million-$100 million would be paid out during the next few years as a loan from Disney but wouldn't be contingent on the performance of the movies.

No matter who wins Miramax, the Weinsteins retain rights from their 2005 settlement agreement with Disney on more than 25 titles that can only be remade with their participation or approval.

The highest bidder is a group put together by David Bergstein, CEO of Pangea Media Group. Bergstein said Thursday that he did assemble the investors, but he is not personally an investor and at this point is only acting as an adviser to the group. He said the investors include his frequent show business partner Ronald Tutor and two offshore entities run by persons from outside the U.S. whom he declined to name. The producer further said theirs was an all-cash $650 million bid and would have been raised to $700 million if Disney had been willing to include the upcoming animated movie "Gnomeo and Juliet."

Bergstein went on to say that Disney already has done due diligence on his investor group and considers them serious bidders. He said he wanted to make it clear that the bid is unrelated to his own existing companies or to anything having to do with the involuntary bankruptcy action or other lawsuits against him.

As to the five unreleased movies, Bergstein said that under his plan, they would be released by Disney. Who would pay the marketing costs has not been determined, he said.

The third investor group, with a bid of $550 million, is Platinum Equity Partners, run by Tom Gores, and an investment firm run by his brother Alec. They are being advised by their brother Sam, who heads the Paradigm talent agency. The Gores' bid is for all cash, and their plan apparently is to ramp Miramax up and run it as a stand-alone movie company again.

A few of the movies already have led to sequels through the Weinstein Co., most notably "Scream" and "Spy Kids."

One analyst characterized these as exceptions because they are very commercial and lend themselves to further iterations. Most of the rest, said the analyst, are more auteur-driven and therefore of limited financial appeal. In addition, the rights to some of these movies are incomplete: Miramax owns only certain rights in specific parts of the world for "The Aviator" and "Reservoir Dogs," for example.

There also are some movies that originally were licensed for a period of years, typically 25, and are within 10 years of lapsing if the terms are not renegotiated.

Still, caveats aside, bidders are expected to benefit from the available foreign rights on many titles, which could be exploited individually or be the basis to launch digital niche channels.

Disney did not return calls seeking comment. Spokesmen for the Gores and for the Weinsteins declined comment.